When Failing To Disclose A Basement Flood Will Cost You

September 29th, 2013 by

When Failing To Disclose A Basement Flood Will Cost You

Does a seller of a house have an obligation to tell a purchaser about a flood after the date of the agreement of purchase and sale but before closing? A recent case would suggest that the answer is “Yes”.

In Soboczynski v. Beauchamp, the parties entered into an agreement of purchase and sale for a home. They did so on November 21, 2007.

Just over a week later, the defendants provided the plaintiffs with a completed Seller Property Information Statement (“SPIS”). In it, they answered “No” to questions dealing with flooding and water problems.

The SPIS also contained the following statement: “ANY IMPORTANT CHANGES TO THIS INFORMATION KNOWN TO THE SELLERS WILL BE DISCLOSED BY THE SELLERS PRIOR TO CLOSING.”  The sale was scheduled to close on January 18, 2008.

Ten days before closing, water seeped into the basement through window wells, flooding the basement rug. The defendants dried out the rug and replaced the under pad.  They did not tell the plaintiffs.

It appears that the defendants had not previously had any water problems in the basement, thought that the incident really was a “one off”, and decided not to tell the plaintiffs because they did not believe they were required to do so because the incident was not of sufficient importance.

The sale closed.  About three weeks later, the basement flooded again. The plaintiffs, who were now the property’s owners, cleaned up the mess and took steps to prevent further flooding, discovering that water accumulated in the backyard and that the window wells in their house were too low.   Remedial measures cost them almost $23,000. They also learned about the flood that had happened before closing.

When Failing To Disclose A Basement Flood Will Cost You

Although the trial judge had dismissed the claim, a unanimous three-judge panel of the Divisional Court, found the defendants liable, concluding as follows:

(a) the flood was important enough that the defendants were obligated to tell the plaintiffs;

(b) the defendants had acted negligently by not disclosing it; and

(c) the plaintiffs could rely on the representations in the SPIS that had been no water problems or flooding, and the defendants could not, in this case, find refuge in the principle of “buyer beware”.

In the end, the defendants were ordered to pay $25,000 to the plaintiffs, an amount which included compensation for inconvenience, mental distress, loss of enjoyment and disappointment.

The case suggests that, in similar circumstances, an honestly held belief about the significance of a flood or other damage will not protect a seller from liability, at least in cases in which a SPIS has been provided to the purchaser. A prudent seller should probably investigate the cause of the damage and, to be on the safe side, disclose it to the purchaser.  At the very least, legal advice about the matter should be sought.  Failure to disclose it could, as was the case in Soboczynski v. Beauchamp, be costly.

When Failing To Disclose A Basement Flood Will Cost You & your Family: Case File [PDF]

Case PDF: Download (When Failing To Disclose A Basement Flood Will Cost You)

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